Bitcoin‘s current rally is possibly coming to a temporary halt as August 2020 draws near a conclusion. Since the start of the month, the narrative and sentiment surrounding Bitcoin have been positive, and the bullishness has rubbed off on other altcoins.
After surpassing past resistance at $12,000, Bitcoin recently clocked in a value of $12,400 briefly, after which a massive $1000 slump was seen on the charts. The depreciation was significant, and sentiment surrounding Bitcoin’s bullish rally has necessarily weakened since the dip.
Source: Twitter
According to the chart, CME Bitcoin Futures recorded significant shorts on leveraged funds as the funding rate incurred by Leveraged trades were negative at the moment. It is a clear indication of the fact that a majority of investors were now betting against Bitcoin’s bullish rally.
BTC/USD on Trading View
During the recent decline, support range of $11,400 was tested. For the time being, it has held strong; Bitcoin is aligned for another re-test of the ascending channel.
If support is breached during its next drop, likelihood of Bitcoin dropping below $11,000 increases substantially and $10,500 could be a possibility in September.
According to Skew charts, $62,000 Bitcoin options are expiring on 28th August. If this triggers a massive move during the last week of August, the conversation could be entirely different in September.
Does a $10,500 re-test completely disrupt Bitcoin’s long-term rally?
As a matter of fact, it might be the exact opposite.
Rather than looking at the short-term picture for Bitcoin, it is important to note the long-term prospect of the market. Bitcoin would complete a month above $10,000 on 26th August, which is a major boost, considering it struggled to breach past this level back in May 2020.
Bitcoin’s market is taking shape steadily, which is necessary for a bullish rally that needs to be sustained for a longer period of time. Bitcoin‘s surge in August was rather erratic as it marched past key resistance, so dropping down to $10,500 allows the asset to attain healthy correction and solidify its local bottom.
Hence, unless we tumble below $10,000 before the end of August, Bitcoin’s long-rally is still overall bullish, if you can keep your eyes on the bigger picture.